Series 66 License Frequently asked questions / FAQs
There are a large number of reason why candidates seek to become series 66 licensed. Perhaps you are one of the many who are entering the financial services business for the first time and are just starting out in a new career. Others are more established financial service professionals and want to expand their business to include both brokerage and investment advisory services. A series 66 license is one way for a registered representative to meet the licensing requirement to offer managed account platforms to clients. Many managed accounts charge asset based fees and allow agents to participate in those fees. As such, these representatives must pass the series 66 licensing exam. Your firm’s compliance department, home office or HR will notify individuals directly or through their manager as to the time frame for taking the exam
A series 66 license from NASAA’s point of view will allow you to become registered as both an investment adviser representative and as a registered representative of a broker dealer. This license will allow you to represent an investment advisory firm offering advice to clients regarding the purchase and sale of securities, the value of securities and or in the creation of financial plans. Investment advisers offer advice to clients for a fee, and the series 66 license will allow you to share in the fees charged by the advisory firm. The vast majority of these fees are charged as a percentage of assets in the client’s account, known as assets under management or AUM. Advisory firms may also charge other fees in the form of hourly fees, subscription fees for news letters or a flat fee for the creation of a financial plan. Regardless of how your advisory firm charges fees, a series 66 license will be required. Your series 66 license will also allow you to function in the capacity of a registered representative of a broker dealer and to earn commissions when executing orders for stock, bonds, ETFs or mutual funds. The series 66 combines the content from the series 63 and series 65 exams and allows the agent to function in a dual capacity.
The series 66 exam has the benefit of combining two tests into one and as such it presents challenges for most test takers . The information tested covers complex topics. A number of these topics are new for most people. The powers of the state securities administrator and the Uniform Securities Act are the state based laws and regulations that most people find challenging . After knowing that an agent needs to be registered in the states where they conduct business most people never deal with the other registration matters tested on the exam. Portfolio management, client recommendations and strategies and general knowledge of securities will also be heavily tested. To pass the exam and become series 66 licensed you must demonstrate that you have mastered these areas. Every person who sits for the series 66 exam is coming from a different background. What one person finds easy to master, another may find very challenging. Most people find the content relating to agent and adviser registration, and the areas relating to the application of the Uniform Securities Act to be among the most difficult. You should prepare for the exam by reading a textbook completely with a highlighter. Take notes and work through the more difficult topics. Some of the question on the series 66 exam are hard but with careful preparation you will be successful. We cannot stress enough that you must read the book, there are no shortcuts and students need to understand this. You must clear your schedule, shut off your phone and focus. In addition to obtaining the knowledge required by the exam, you must master the application of the information by taking as many practice questions as you can. We recommend at least 60 – 70 hours of preparation to ensure you pass your series 66 exam and become licensed to represent a broker dealer and a registered investment adviser.
The answer is, that while it feels like your series 66 license is indeed transferable, in actuality it is not. If you want to change firms, your series 66 registration / license along with all of your other registrations must be terminated by your employer. With a series 66 license you are most likely working at a firm that is registered as both a FINRA broker dealer and as a registered investment adviser. Since you are registered at a FINRA member firm, Your former employer / the firm that you are leaving will fill out and submit a Form U5 to FINRA. This will terminate your employment and your registration with that firm. When you arrive at your new firm you must fill out and submit a new Form U4. This will begin your registration with your new firm and your series 66 license, along with your other registrations, will become active at your new firm upon receiving notice from FINRA and the states where you conduct business. Your license will only become effective once you have received notification from each state where you plan to conduct business, that you license has become effective.
Obtaining a series 66 license is an investment in professional development. You will be required to invest your time and some candidates will be required to pay for the costs. Your series 66 license will qualify you to function as a agent of a broker dealer and as an investment adviser representative. It does not make you a stockbroker or a registered investment adviser or RIA. Only the firm you work for will be the stockbroker or registered investment adviser. Many people who obtain a series 66 license enjoy lucrative and successful careers in the financial services industry. The good news is, for those who absorb the costs, they are relatively low when compared to other types of training, certification and college expenses. Some employers pick up or reimburse the costs of training and the testing and registration fees. Even for these people many obtain additional resources such as additional test questions, books or videos to ensure they pass their exam and become licensed. For those who have to pay all of the expenses out of pocket, it usually only costs a few hundred dollars for the testing fees and quality training materials. . You will find that obtaining a series 66 license opens many doors for you throughout your career.
While NASAA, the North American Securities Administrators Association is contemplating enacting continuing education requirements for investment adviser representatives, at the present time there are no continuing education requirements. That being said, if you hold a FINRA license such as the series 7, you will be required complete the FINRA mandated continuing education requirements for that license.
Your series 66 license allows you to register as an agent for both a broker dealer and a registered investment adviser. The series 66 by itself will not allow you to conduct any business. You must also obtain the series 7 license. The series 7 is the co-requisite for the series 66. You may take either exam first. However, you will not be allowed to conduct business until you have obtained a series 7 and series 66 license. We hope that this answers many of your frequently asked questions about the series 66 license. If you have any additional questions please call or email us.
Good luck on your exam.
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